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DOD Budget: Budget Impact of Proposed Reduced Retirement Fund Payments

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Report Type Reports and Testimonies
Report Date June 5, 1992
Report No. NSIAD-92-80
Subject
Summary:

Until 1984, the Defense Department's (DOD) military retirement system was funded on a "pay-as-you-go" basis; appropriations were provided annually to cover the cost of retirees' pensions being paid out that year. Since then, DOD has made monthly payments to a U.S. Treasury interest-bearing fund to cover future retirement benefits earned for military service. This report discusses a DOD proposal to reduce its contributions to the fund by $11 billion by changing the way annual payments to the fund are calculated. GAO notes that the reduction in DOD retirement fund payments will not yield federal budgetary savings because such reductions will eventually require offsetting increases in Treasury payments to the unfunded liability account.

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